Chinese stocks will settle in a lower trading range than previously expected until Beijing introduces more forceful policy responses to address the contagion risk from a property slump, according to Goldman Sachs Group Inc.

The Wall Street bank has cut its full-year earnings-per-share growth estimate for the MSCI China Index to 11% from 14%, and reduced the 12-month index target to 67 from 70, according to a Monday note by strategists including Kinger Lau. That new target implies a 13% gain from the gauge’s Friday close.

“The post-July-Politburo excitement was short-lived,” the strategists wrote, referring to the Communist Party’s top decision-making body. “The ailing housing market and its potential contagion to the real and financial economies are the widely-cited reasons for the correction.”

This is the second time in three months that Goldman has lowered its views on Chinese equities, as pessimism permeates the country’s stock market following a deepening property crisis and signs of stress in the shadow banking system. Recent measures by authorities to boost market confidence have been piecemeal in nature, with Goldman’s economists also predicting any large-scale stimulus from Beijing off the table for now.

Chinese shares are still supported by “inexpensive valuations and light investor positioning,” but the upside is capped by the ongoing liquidity and growth headwinds, the Goldman strategists wrote. The growth pressures have resulted in renewed downgrades in profit expectations, they added.

The MSCI China Index fell more than 1% on Monday, taking its decline from a January peak to 23%.

Goldman last reduced its MSCI China target to 70 from 80 in June, citing earnings and currency concerns.

In the latest report, the strategists recommended sectors and stocks with higher earnings visibility and profit delivery capability, as well as those that benefit from the yuan’s depreciation. It suggested going underweight in companies disproportionately exposed to financial or investment incomes.